What is it about?

The article that served as the source and inspiration for the information presented on this page was originally published under the title “Pasifik İttifakı’nın çelik endüstrisinde söz sahibi kim: Çok kriterli karar verme yöntemlerinden kanıtlar” in “Uluslararası Yönetim Akademisi Dergisi”, dated 2024, Volume 7(1), pp. 1-27. The content below offers informative and explanatory insights that include personal perspectives on the topic. You are welcome to share your questions, comments and suggestions via the contact channels and academic/social platforms listed in the menus on the right. The author(s) expect proper citation of their original work as a recognition of their scholarly contribution published in peer-reviewed scientific journals. Therefore, please refrain from citing this page and instead cite the original article. Please note that this text serves primarily as an introduction and expression of viewpoints. Thank you for your understanding. Since its founding, the Pacific Alliance has attracted the attention of countries worldwide, thanks to its high business potential, clear vision, dynamic structure, and the fact that its members are among the world’s top ten economies. Starting with a strategy of few members and many observers, the Pacific Alliance has been building a strong brand value. Its members are also known for having some of the richest iron ore deposits in the world. Given the strong backward and forward linkages, the iron and steel sector plays a crucial and complementary role in both international trade relations and economic integration efforts within the Alliance. For this reason, we have focused our study on evaluating the steel industries of Mexico, Peru, Chile, and Colombia to identify which country is leading as the driving force of industrialization. Using data from 2019 to 2021 and applying the MEREC-COBRA multi-criteria decision-making methods, our analysis concludes that Mexico’s steel industry demonstrates the best performance among these countries.

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Why is it important?

We live in a world where international trade and production are shaped by the complex web of relationships between states, global organizations, economic unions, civil society, and business and finance circles. Understanding how these connections influence what products or services are made, where, how, for which markets, and at what cost is key to grasping today’s global economy. Over time, we’ve seen that existing economic integrations and unions sometimes fall short or leave their members searching for alternatives. This is especially true in regions where protectionism and economic stagnation have taken hold. In this context, the Pacific Alliance was created as a fresh alternative to groups like MERCOSUR, aiming to reshape the economic landscape and address long-standing debates. Formed by Mexico, Chile, Peru, and Colombia, countries rich in natural resources, the Pacific Alliance is seen from two angles. On one hand, it’s viewed as an exciting economic force thanks to its members’ natural wealth and strategic location. On the other, some see it as a tool for the U.S. to influence regional trade and political norms. Regardless, it’s clear that the Alliance is playing a vital role in turning geopolitical tensions into geoeconomic opportunities, opening new doors for trade and integration. At the heart of this dynamic is the iron and steel industry a sector that kickstarts industrial development by turning raw iron ore into essential products that fuel economies. Because this industry has strong links to many other sectors and significant economic impact, growth here can drive entire countries forward. We know that iron and steel production depends heavily on imports to complete its processes, making it a key player in international trade. As global economies become more interconnected, the competitiveness of countries and regions depends on how well they manage their natural resources, industrial capacities, and trade policies. Developing core industries like steel production is not only a smart economic strategy for resource-rich countries—it also offers political advantages on the global stage. For these reasons, we see the Pacific Alliance as a vital subject for study. With member countries that hold some of the richest iron ore deposits in the world, the Alliance offers a unique lens to understand how economic integration and industrial strength combine to shape regional and global markets. Our focus is to explore which member country leads the charge in steel industry development and industrialization, and why this matters for the future of trade and economic growth.

Perspectives

In my view, the use of the MEREC method to determine the importance weights of the criteria offers valuable insights into the Pacific Alliance’s steel industry dynamics. According to the results, the productive capacity index consistently holds the lowest weight across all years. I believe this reflects the Alliance’s approach to branding, focusing on broader trends first and then narrowing down to specific product groups and sectors, applying a more streamlined strategy within member countries. Interestingly, the highest weight scores were related to iron and steel raw material imports in 2018, and for iron and steel imports excluding raw materials in 2019 through 2021. This points to the crucial role of raw materials like iron ore, scrap, ferroalloys, and coking coal in steel production. I also note that global energy demand surged between 2000 and 2018, with Asia leading 80% of the increase. This was accompanied by significant fluctuations in coking coal prices and trade tensions such as the US-China trade war, which directly affected steel production worldwide, including scrap availability and pricing. Looking closely at Mexico, which stands out as a leader within the Pacific Alliance, I find it compelling that around 85% of steel production there relies on scrap. This aligns with my view that Mexico’s steel industry is better positioned to adapt to both global environmental pressures and supply challenges. The MEREC results also correlate well with trade data, the relatively high weight of non-raw material steel imports in recent years signals the Pacific Alliance’s struggle to fully meet internal demand through domestic production. When I examined the COBRA method ranking, Mexico consistently performed best from 2018 to 2021. This matches Mexico’s steel export dominance over the other member countries and its high per capita steel usage. I also see the country’s relatively low carbon emissions per ton of steel as an encouraging sign, suggesting that Mexico is advancing towards greener production. Despite ongoing modernization efforts, I believe the Pacific Alliance’s steel sector still faces serious challenges, including rising energy prices, inflationary pressures, and political shocks. The lack of transparency in pricing and insufficient protective mechanisms against price volatility add to these difficulties. Given the region’s rich iron ore reserves, I think there is a strong opportunity for the Alliance to improve environmental performance by emphasizing sustainable practices in new steel facilities and reducing scrap dependency through domestic supply expansion. Finally, in my view, political stability and social cohesion within member states are critical for the industry’s success. The insufficient quality of education and underinvestment in R&D currently hinder workforce productivity, technological advancement, and economic growth. Therefore, I recommend that member countries prioritize modernization of productive resources, strengthen production and trade networks, and foster entrepreneurial capabilities to ensure the steel sector’s sustainable development within the Pacific Alliance. PLEASE NOTE THAT THE CONTENTS ON THIS PAGE ARE NOT IDENTICAL TO THOSE PRESENTED IN THE ORIGINAL STUDY. FOR INFORMATION, COMMENTS, OR SUGGESTIONS, PLEASE CONTACT THE AUTHORS.

Ümit Remzi Ergün
Canakkale Onsekiz Mart Universitesi

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This page is a summary of: Pasifik İttifakı’nın Çelik Endüstrisinde Söz Sahibi Kim: Çok Kriterli Karar Verme Yöntemlerinden Kanıtlar, Uluslararası Yönetim Akademisi Dergisi, September 2024, Uluslararasi Yonetim Akademisi Dergisi,
DOI: 10.33712/mana.1413858.
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